Stocks Slide, Led by GM, Financials

Stocks skidded Tuesday, as a quick mood booster from an upbeat consumer sentiment reading wore off, and the drag of GM and financials set in.

Volume was expected to be thin again today ahead of Wednesday's shortened trading session and Thursday's Christmas holiday.

Asian stocks ended lower as many investors closed their books and went away for the holidays while European shares were cautiously higher in thin trading.

In its third and final reading on third-quarter GDP, the Commerce Department held its estimate at minus-0.5 percent. Economists expect that the economy deterioriated further in the fourth quarter, projecting a decline of as much as 6 percent.

Stocks are almost guaranteed to log their worst year since the 1930s, though they'll go out on a soft note, not a cymbal-clashing crescendo, as volatility subsides. The CBOE Volatility index has plunged to numbers it hasn't seen since late September, shortly after the collapse of Lehman Brothers.

And, it showed in consumers' mood: Sentiment rose to 60.1in December from an upwardly revised 59.1 in the prior month, according to a University of Michigan and Reuters poll. November was initially pegged at 55.3.

News on the housing market was, not surprisingly gloomy: New-home sales slowed to the slowest pace since 1991, falling 2.9 percent to an annual rate of 407,000 in November. It was lower than the 420,000 rate economists had expected, as was the downward revision to the prior month. Still, the median-sale price rose.

Meanwhile, the pace of existing-home sales plunged a record 8.6 percent to a 4.49-million-unit rate last month, and the median home price fell for a fifth straight month.

Some value in stocks may emerge next yeardespite a "disaster" first half for the economy, as mining stocks, commodities and emerging markets are likely to stage a rebound, well-known bear Marc Faber, editor of the Gloom, Boom and Doom Report, told CNBC.

General Motors shares tumbled more than 15 percent after Standard & Poor's Ratings Services and Moody's Investors Service downgraded ratings on Chrysler and Ford . S&P said it believes "the bankruptcy risk remains high" for GM and Chrysler, as well as for Ford Motor, for next year.

Financials rounded out the top drags on the Dow, with Bank of America and Citigroup off more than 3 percent.

Shares of Unisys jumped more than 7 percent after the IT-services company said late Monday that it would cut 1,300 jobs and suspend matching contributions to its U.S. 401(k) plan, resulting in cost-savings of $225 million.

Shares of CIT Group also rose after the commercial-finance company won preliminary approval to receive $2.33 billion from the government's $700 billion bailout program.

Meanwhile, Alcoa said it agreed to swap a stake in a Swedish extrusion business for Orkla's interest in the Elkem Aluminum smelting business, bringing its global smelting capacity to more than 4.7 million metric tons and becoming the world's largest aluminum producer.